Good morning, ladies and gentlemen. Welcome to Itau Unibanco Holding Conference Call to discuss Third Quarter 2013 Earnings Results. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session, and instructions will be given at that time. (Operator instructions). As a reminder, this conference is being recorded and broadcast live on Investor Relations website at www.itau-unibanco.com/ir. A slide presentation is also available on this site. The replay facility of this conference call will be available by phone on 551-146-886-312, access code 8549644 hash tag. Before proceeding, let me mention that forward-looking statements are being made under the Safe Harbor of the Securities Litigation Reform Act of 1996. Actual performance could differ materially from that anticipated in any forward-looking comments as a result of macroeconomic conditions, market risks and other factors. With us today in this conference call in Sao Paulo are Mr. Alfredo Egydio Setubal, Executive Vice President and Investor Relations Officer; Mr. Caio Ibrahim David, Chief Financial Officer; and Mr. Rogerio Calderon, Corporate Controller and Head of Investor Relations. First, Mr. Alfredo Setubal will comment on third quarter 2013 earnings conference, after, management will be available for a question-and-answer session. It’s now my pleasure to turn the call over to Mr. Alfredo Setubal.

Good morning everyone. It is a pleasure for us to be here again for the third quarter conference call. I think is the best result that we released and since the merge with Itau and Unibanco. The best quarter since we are now [lying]. The trends are very good and we were able confirm that our strategy specially, the strategy that we took in the last two years reducing the risk of the company and controlling much better the costs than reducing costs and I think now with the third quarter numbers. For those who are following through their net we are starting on the slide number two, the highlights for the quarter. Of course the first one is the recurrent net income of little bit over R$4 billion, growth of 11% when we compared to the second quarter of 2013, and the total net income for the year R$11.2 billion. This result implies in our recurrent ROE of 20.9 that is increase of our 160 basis points when we compared to the second quarter and 240 basis points when we compared to the third part. Year-to-date the ROE is almost 24% and 19.8. Although highlights on the loan portfolio the growth of 2.9 and that was when we compared to the last year. If we don’t consider the decrease in portfolio that reduce 20.9% in these 12 months and the increase of the total credit portfolio would have been 14.3%, much in line with the growth of the systems inventory. Financial margin with client, an increase of 1.10% the total of R$11.5 billion and the quarter that is R$3.7 million year-to-date is a good trend that the margin with clients for this quarter again increased and we expect that these lines to continue to increase after some quarters in…

(Operator Instructions). Our first question comes from Daniel Abut with Citi.

Good morning Alfredo. A couple of questions, number one on the insurance business. As you explained in one of the slides this business which is posting ROEs of 35%, 36% contributes above 15% of the bottom-line of the entire group. That’s about half of the contribution of your closest peer. So do you have a target of where do you see that evolving and what type contribution to the group the insurance business should have over the next few years? And second and somewhat related to this, and the question is on your ROE as you correctly explained your ROE has been 20% for the first nine months of the year, 21% in this quarter alone excluding no recurrent items, where do you see the ROE being sustained? Because if I consider some of the things as you said that your contribution from the market related business is still below par and would probably trend towards the R$500 million contribution that is the average historical, then insurance probably is higher ROE business and we continue to grow its participation. Then the lending business in terms of volume growth is still below par should probably trend up. And finally you have excess capital at the bank level and that is a driver on the ROE and that should probably improve, as you improve the allocation of capital. Where do you imagine your ROE being sustainable once you can see that all these factors if the floor now seems to be 20%, 21%?

Hello Daniel. We see the trends when we analyze this trend of the last quarters and what we see in the coming quarters and then the strategy that we have is showing in terms of expenses and credit portfolio and so on. We are very confident that the level of around 20% is sustainable in terms of ROE for the bank. Of course we have closed of the numbers and as we think the environment look the local economy, international trends, but the trend seems to us very positive and I think we are showing that our strategy both in terms of banking and insurance was correct. So the [Portugal] also showed good results in this quarter and bank insurance continues to grow in our numbers, the strategy of reducing the risk of the portfolio was correct. So we are not seeing anything in the short term that at least that we will move the kind of returns that we are showing in the next quarter and especially this quarter we think that is quite sustainable this level that we show this quarter.

But we do believe that this proportion is going to increase as time goes by and when you consider the insurance business itself is actually very similar in size, when you compare the industries that we operate, remember that we don’t like and we don’t operate one of the most important products of insurances, insurance when you consider only revenues. And I am returning health insurance of course, but the size of insurance business is going to outgrow the other portion and probably this percentage that you mentioned is going to increase, but not to reach the same 30% level whatever, because the other businesses are actually also growing.

No, Rogerio I appreciate that. I was not suggesting that the growth should be to trend to about 30% just to have an idea, if you have a number or a target. If you look at Banco do Brasil for example as part of the civilized location they are currently above 15% contribution like you and they can clearly targeted to grow that towards a 20%, 25% levels. Do you have a target and a timing for that target?

No, we don’t have any targets on this.

Okay. And just a follow up on the first Alfredo. I see what you say and it seems to me that the 20% should be lower given all the trends that you indicated, we are already at 20% , 21% and it more seems that only get better more likely that 20%, 21% should be more a floor or have room to be above that. So when you think, you’re thinking about 20%, it seems like you are pulling the bar too low?

I think it’s difficult to say today that is a floor. I think it’s sustainable around these numbers, we are confident about that. But I think we have to follow the environment, Daniel. It’s difficult to really be very assertive that this level, it will be up, do we expect the yield, yes, but...

On the environment that was potentially be a drag, what are the things that still worry you, spreads for example or what are the things that still you want to monitor before you go mid to a higher number?

Daniel, could you repeat these last words?

I understand that I feel okay that there are still too many moving pieces that need to be watch before you are willing to go like higher number. So what are the things that still worry you in that environment? Is it spreads, what are the things that are still too early to say?

I think the international environment is a issue. Probably as I said some points, the fed in the U.S. really start to increase in first grade, so this we saw some months ago, the impact that this can have on the economy of our emerging market like Brazil for example. You said it was [roughly] spread, no I think that you've seen at least that they are worse in terms of reduction, our spreads are gone. We are not seeing today that Bank is fighting for gaining market share through prices through reduction of spreads. So we can even see some rising in the mix, some improvement in terms of this spread in the coming quarters. But we have to follow closely the economy and unemployment in Brazil, inflation we have electoral, (inaudible) next year. So I think we have had some things that can impact the environment. Even though we consider all these not very high probability, but we have to consider all these in the scenario that we are working.

Thank you, Alfredo.

Our next question comes from Marcelo Telles with Credit Suisse.

Hello, everyone. Thanks for the opportunity. I have two questions, the first one I mean we are of course we are seeing that it seems to be a change in the way in that resonance of public banks I would say in several segments rise up their credit portfolio. But my question to you is, I think that your delinquency numbers were very good and are very bullish for the improvement down the road. Do you see any risk particularly in the SME segment of data pullback from public banks could actually trigger some deterioration in your portfolio and of course in the other portfolio that other like private sector banks I think this has been kind of a recurring theme that investors have been asking about? Do you think there is any significant overlap between your SME portfolio and let’s say the SME portfolio of Banco do Brasil or some of the other public banks? And my second question is regarding NII, net interest income growth next year. I was wondering if you could share with us what you think would be kind of a worst case scenario for NII growth in 2014. I understand there are many variables that would definitely have an influence on that. And of course part of that would be what your expectations are for your treasury results because we saw still relatively no number versus the number you used to say about R$800 million. So I don’t know in which timeframe you would expect that number to convert at least to let’s say about R$500 million, R$600 million if it could convert to that number? Those would be my questions. Thank you.

Marcelo, Rogerio speaking. So regarding your first question, when we look at our portfolio as a result of this much more selective approach that we have been applying, what we see in our portfolio for companies SMEs are now much stronger and as a consequence much more resilient than what we had in the past. So it’s now based on operations fully collateralized or importantly partially collateralized. So we really don’t think that we would be affected by any eventual change in the system as a whole. We don’t know, of course we are not sure about the quality of the portfolio of other banks. But we don’t think that it should be a matter of a systemic [breach] or anything like this and absolutely it’s not going to affect our credit portfolio. Your second question is of course a bit more complex. When we look at net interest income, there are several different parts accounting for this resolution. Talking specifically each one, on each one of them, we see volume is likely growing, so what should stimulate NII growth, we see it’s likely to be a little bit higher than today and eventually as a consequence higher in average next year than this year, so again contributing for a higher line. And we see a few present net interest margin compressions because of the change in our mix of portfolios and asset quality. So all together, we see conditions of it is right, increasing mix into the income line when talking about price. When talking about this same line regarding what we say margin with the markets, that’s much more difficult to forecast. And we think, I think it’s important to highlight that we don’t see savings conditions are being backed to our historical level. So we believe we can perform better than what we are posting this quarter and last quarter as well. But not that to our usual level of R$800 this is far from what we have now because of the structural position that we have built up in the past on a lower interest rate level. So looking forward even performing better, we should not expect for a higher than let's say, R$500 million something like this in the coming quarters. This is of course a big gap, but qualitatively saying, it's not difficult to make two different statements here. Yes, we can deliver better than today and it's very difficult to believe that we will back to our historical level.

Thank you so much, Rogerio.

Our next question comes from Mario Pierry, Deutsche Bank

Hi. Good morning. Let me ask you two questions as well, the first one is related to your provisions. You had originally or you had recently guided for provision charges of R$19 billion to R$22 billion for this year. The number for the first nine months is running at R$14 billion, so clearly you are running below your guidance. Just wondering, if you think, you did not, you chose not to change any of your guidance, but I was wondering if you see room for provisions to come a bit lower and/or even below your guidance from R$19 billion to R$22 billion?

Yeah. It's possible that it comes below R$19 billion. If we just repeat the third quarter and the fourth quarter is going to be lower than R$19 billion and we believe that we can do even better than this, so at the end of day it’s possible if not likely that is going to be below R$19 billion. The reason we are not changing anything in terms of guidance is first of all because it’s not meaningful. The second, because we don’t think that changing guidance as the year ended is so short is so close, we don’t think that it makes sense.

And what about 2014, should we expect provisions to be lower than 2013?

Could you repeat, Mario?

No, just your outlook for provision charges next year, 2014?

So we had, we still have our asset quality improving. So chances are that it comes in a lower level than today. On the other hand, we have -- rules. So looking at the same figure with a lightly potential down, down is possible. We don’t see under the current, this environment on our portfolio we don’t see provisions doing in only in our loans.

Okay. So my second question then is with regards to loan growth. As you’re saying, it seems like asset quality is completely under control. Also, Alfredo’s remarks earlier that we're not seeing banks fighting for market share, seems like you have a rational pricing environment. So what is your appetite for taking on more credit risk especially as you’re able to better price the risk, it seems like the public sector banks being less present so you could proceed better spreads on your products. So I was just wondering, what kind of loan growth can we see next year given that asset quality is under control when state-owned banks seem to be less aggressive?

So we should be closer to the system growth, because the portion that is predicting us are following the market that is the overall [visit] due to shrink one or two quarters more and then only restarting to grow stronger in the second half of next year. So as this is going to be better than this year, marginally saying, which we should be closer to the market’s growth next year. What means that it implies some marginal acceleration something like acceleration. And this acceleration I think is very important to highlight that we are not accelerating because we are changing the risk appetite. We didn’t change; we are changing nothing regarding our risk appetite because the improvement that we see clearly now the portfolio is not so clear when we look at the market. So we don’t see conditions of being more, less selected than what we are doing right now.

Okay. Thank you very much.

Our next question comes from Carlos Macedo, Goldman Sachs.

Good morning, gentlemen. Congratulations on the strong set of results. A couple of questions, somewhat follow-ups to the ones that already been asked both have to do with loan mix. So we've seen the loan mix change significantly with payroll loans increasing materially as a part of the overall loan mix and position of their less risky loans. When you look at the progression of the 90 day NPLs, this is the lowest ratio since the merger, but also the portfolio you have is completely different than what you had in the merger. What is your expectation for and how low can this NPL ratio get given the mix of the portfolio. In other words, if you adjust that NPL ratio to where it was during the merger and put in the current mix of the portfolio, is it reasonable that we go to 3% or is 3% completely out of the question assuming that the underlying economic conditions don’t change them materially going into next year? And then I have another question.

Okay, Carlos. Well, clearly it’s possible that it goes below the current level. How far, is a very difficult question to answer. You know vintage are getting better every single new vintage. We have better quality in collaterals et cetera. So it’s possible that we deliver 50, 60 basis points lower than today. More than this, we should closer to this moment to reassess the question.

But I mean just for instance in your individuals portfolio in 2010 when you had 5.7% NPL ratio you probably had something like 40% of that portfolio in auto loans and now you have 40% in payroll loans plus mortgages going from 6 to below 5.8 which is what you had then. Is it reasonable expectation, would you agree with that statement?

Even if we use the equal portfolios in terms of products, we have today a better mix of times quality of times than what we had by that time. So we have today a better level of delinquency than any older moment in our history.

Okay. So you are saying that’s still part of the reason why the NPLs haven’t come down even further, it’s still cyclical?

Cyclical, whether it’s cyclicality I don’t know I will favor since we are adding better vintage level every new month.

Okay. Thank you, Caio. And the second question is the flip side of that is margins and if you weren’t for the additional working days in the quarter your NII would have been essentially flat sequentially despite some loan growth. Next quarter you won’t have additional working days, I think in fact we go back. And so there is, given what we saw there is other possibility that unless loan growth is very significant, the NII does remain flat or even comes back because of the change in mix. How strong is this change in mix and how should we look at it affecting your NII going forward. I mean it’s a continuation of Marcelo’s question from before. But is that something that will continue to have this negative impact and will the provision expenses from the lower NPLs be able to offset most of the damage there?

You are right on the allowances, but proceeding as I think we see some room for increasing NII in the fourth quarter and beyond. It’s not going to be, I mean, an exciting growth, but it's going to be a positive evolution.

Okay, thank you.

Our next question comes from Saul Martinez, JPMorgan.

I have two questions as well. The first question is really a follow-up to number of questions that deal with your financial margin and provisioning levels. Turning to slide, the fifth slide, you gave your net interest margin evolution over time both before provisions and after provisions and what it shows obviously is as Alfredo highlighted was that your risk adjusted NII and NIMs have been expanding. It seems like you continue to think that that will continue. Can you give us a more color though on how you see this evolving in the next few quarters? How much more room is there for your credit risk adjusted net interest margin to expand say over the next four or six quarter, because you're still relatively far below where you were in 2011 it seems? Second question is on your capital strategy, seamlessly you have a very comfortable capital position even factoring in Basel III implementation, especially when you consider your ROEs, your current payout ratio and the fact that your growth is coming from products that have very low risk ratings. Can you just comment on how you are looking at capital deployment, because it seems between dividends non-organic growth, because it seems like you are generating more capitals than you need to sustain your organic growth?

Regarding the evolution of our spreads on net interest margin, we are still finishing our business plans for next year and we should be back to you guys. We know that you want to have anticipated everything that is going to happen next year. But we think that we are in a better position to talk on this in the next conference call. But we do believe that there is some room for still increase our net interest margin. Adjusted by this we believe that the compression we see in the net interest margin pre-provision is going to be lower in the coming quarters because of the change in the portfolio mix to be less impacted than today. And then although the improvements in the loan loss provision is going to be as well lower than today, this trade off should be still positive. So this is what I can say qualitatively, then maybe we can go further invitation and figures in the next quarter. Regarding your question, so in relation to our capital deployment, I think it’s pretty clear our intention has been back to a normal level of growth when this restructuring of the auto loans portfolios finished probably we will be back to that around 15% growth in our credit portfolio. If we consider that the 20% is a sustainable level by keeping the current dividend payout and growing 15%, we should be more or less with capital stabilization. In case however I know that you are question is a little bit different, so in case we've had (inaudible) so not possible to grow at the same level our credit portfolio and this still higher ROEs, then eventually we get into our position of excess of capital. At this point in time we should have one, a couple of different measures. So take one, it’s of course increasing dividend payout, but we also look at the strategical opportunities of moving internationally as you know. So at this point that we have business decision to take, then incidentally we would be dependent on the circumstance at that specific point in time.

Okay. Do you feel like you have excess capital today?

If you look at the full implementation of BIS, our total capital is 15%, but the core capital, the common equity tier 1 would be around 10%. The last figure we calculate precisely is in the state d 9.7%. So if eventually it makes sense of capital but not a big one.

Okay. Great thanks a lot, Rogerio.

Our next question comes from Jorge Kuri with Morgan Stanley.

Your asset quantity indicators have done very especially in the consumer segment. Now the labor market in Brazil has shown some sign of deceleration this year, actually unemployment rate went up 10 bps in September. Have you done any sensitivity about unemployment and your NPL ratio for consumer loans? Let’s say if unemployment goes by 100 basis points one year by how much the consumer NPL ratio should increase? Thank you.

Okay, thank you very much.

Our next question comes from Boris Molina with Santander.

I had a question regarding your investment plans on IT, regarding how the tangible assets related to software development and software application has been accelerating this growth. This obviously had impact on the capital ratio. So what is the quarterly rate of additions to recent tangibles that you expect to see in the third quarter is around $R450 million. Is it going to go up to 550 and 600 on a quarterly basis? How could we expect this revolution in terms of your quarterly outlays in IT? And what is the monetization calendar for this type of intangibles because these intangibles grow with some capital and then (inaudible) for reported earnings. So I would like to get an idea of how this is going to absorb?

So we are trying to conclude them how to address the points, I think we have some comments to make here. This first and most important product that this is a investment that we are doing there IT. This amounts to more than R$10 billion, R$10.4 billion. It's now at through as fast it's been implementation. This is going to impact our capitalization in both 2014 and ’15 to increase of course and then depreciation to increase especially as from 2015. However, we have a very important efficiency to capture out of these investments here. So we don't see think that this should imply any further pressure on our profitability. This should be matched. In terms of capital, the portion on the intangible, I see could you develop a little bit more on this and this is the way we should address the points.

No I was just trying to get an idea, if quarterly additions to your software development acquisition intangible, which are right now, they are almost double in the third quarter, 450. So, is this a steady state level of investment on a quarterly basis or could you go up to 600?

No, no it's actually in a higher level today than our normal level, because of this, the part of this package, the full package of R$10.4 billion is related to the software.

Yeah, okay. You would expect it to go a little bit higher from current levels or is this level that you think is going to be recurred?

I should look at the figures in the budget to be more precise on this but essentially in short term, but then coming back to a lower level, we are now in a enough. I don’t know if we are at the top peak of the disbursement in this project, but we are in the higher level then to usual.

Okay, thank you.

This concludes today’s question-and answer-session. Mr. Alfredo Setubal, at this time you may proceed with your closing statement.

Thank you all for the participation. We have very good results. We expected to continue on this trend in the coming quarters. So thank you for your time here with us and we expect to be together again in the third quarter conference call. Thank you.

That does conclude our Itau Unibanco Holding earnings conference for today. Thank you very much for your participation and have a good day.